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# SECURITIES AND EXCHANGE COMMISSION

# Washington, DC 20549

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# Form 10-Q

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# [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THESECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2001

OR

# [  ] TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

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Commission file number 0-26138

# DENDRITE INTERNATIONAL, INC.

(Exact name of registrant as specified in its Charter)

# New Jersey       
                   
          
               22-2786386

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(State or other jurisdiction of incorporation or organization)   
    (I.R.S. Employer Identification No.)

1200 Mount Kemble Avenue
Morristown, NJ 07960
973-425-1200

---

(Address, including zip code, and telephone
number (including area code) of registrant's
principal executive office)

Indicate by check mark
whether the registrant: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes [X]     No [  ]

Indicate the number of
shares outstanding of each of the issuers classes of common stock, as of
the last practicable date: at August 7, 2001 there were 39,598,159 shares of
common stock outstanding.

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`DENDRITE INTERNATIONAL, INC.
                                      INDEX
                                                                                           PAGE NO
                                                                                           -------

PART I.       FINANCIAL INFORMATION

ITEM 1.       Consolidated Financial Statements (Unaudited)

                 Consolidated Statements of Operations
                     Three months and six months ended June 30, 2001 and 2000                   3

                 Consolidated Balance Sheets
                      June 30, 2001 and December 31, 2000                                       4

                 Consolidated Statements of Cash Flows
                      Six months ended June 30, 2001 and 2000                                   5

                 Notes to Unaudited Consolidated Financial Statements                           6

ITEM 2.       Management's Discussion and Analysis of Financial Condition
              and Results of Operations                                                         9

PART II.      OTHER INFORMATION

ITEM 4.       Submission of Matters to a Vote of Security Holders                              19

ITEM 6.       Exhibits and Reports on Form 8-K                                                 19

Signatures                                                                                     20`

---

## PART I.  FINANCIAL INFORMATION

## ITEM 1. Consolidated Financial Statements.

`DENDRITE INTERNATIONAL, INC.
                                                 CONSOLIDATED STATEMENTS OF OPERATIONS
                                                 (IN THOUSANDS EXCEPT PER SHARE DATA)
                                                              (UNAUDITED)


                                                        THREE MONTHS ENDED JUNE 30,                SIX MONTHS ENDED JUNE 30,
                                                       2001                    2000              2001                   2000
                                                       ----                    ----              ----                   ----
Revenues:
   License fees...........................           $  4,273                $  6,050          $   7,276              $  11,659
   Services...............................             47,689                  45,681             96,566                 87,134
                                                     --------                --------          ---------              ---------
                                                       51,962                  51,731            103,842                 98,793
                                                     --------                --------          ---------              ---------
Cost of revenues:
   Cost of license fees...................              1,198                   1,130              2,161                  1,875
   Purchased software impairment..........              2,614                      --              2,614                     --
   Cost of services.......................             31,042                  20,950             57,208                 40,534
                                                     --------                --------          ---------              ---------
                                                       34,854                  22,080             61,983                 42,409
                                                     --------                --------          ---------              ---------
Gross margin..............................             17,108                  29,651             41,859                 56,384
                                                     --------                --------          ---------              ---------
Operating expenses:
   Selling, general and administrative....             28,632                  16,146             49,095                 31,584
   Research and development...............              2,968                   2,701              5,835                  5,340
   Restructuring charge...................              6,134                      --              6,134                     --
   Asset impairment.......................              9,623                      --              9,623                     --
                                                     --------                --------          ---------              ---------
                                                       47,357                  18,847             70,687                 36,924
                                                     --------                --------          ---------              ---------
Operating income (loss)...................            (30,249)                 10,804            (28,828)                19,460
   Interest income........................                671                     757              1,597                  1,519
   Other expense..........................                (58)                    (25)               (83)                   (28)
                                                     --------                --------          ---------              ---------
Income (loss) before income tax expense
(benefit).................................            (29,636)                 11,536            (27,314)                20,951
   Income tax expense (benefit)...........            (10,060)                  4,153             (9,224)                 7,542
                                                     --------                --------          ---------              ---------
Net income (loss).........................           $(19,576)               $  7,383          $ (18,090)             $  13,409
                                                     --------                --------          ---------              ---------
Net income (loss) per share:

   Basic..................................           $  (0.50)               $   0.19          $   (0.46)             $    0.34
                                                     ========                ========          =========              =========
   Diluted................................           $  (0.50)               $   0.18          $   (0.46)             $    0.33
                                                     ========                ========          =========              =========
Shares used in computing net income (loss)
per share:

   Basic..................................             39,537                  39,137             39,659                 38,977
                                                     ========                ========          =========              =========
   Diluted................................             39,537                  41,151             39,659                 41,181
                                                     ========                ========          =========              =========

The accompanying notes are an integral part of these statements.`

---

`DENDRITE INTERNATIONAL, INC.
                                   CONSOLIDATED BALANCE SHEETS
                                (IN THOUSANDS EXCEPT SHARE DATA)
                                           (UNAUDITED)


                                                               JUNE 30,        DECEMBER 31,
                                                                 2001              2000
                                                                 ----              ----
Assets
Current Assets:
   Cash and cash equivalents............................       $  50,054        $  73,230
   Short-term investments...............................           8,395            4,143
   Accounts receivable, net.............................          38,968           48,182
   Prepaid expenses and other...........................           7,407            6,987
   Prepaid taxes........................................           8,799            1,564
   Deferred taxes.......................................           4,675            1,160
                                                               ---------        ---------

     Total current assets...............................         118,298          135,266
                                                               ---------        ---------
Property and equipment, net.............................          21,784           15,924
Facility held for sale..................................          10,832               --
Other assets............................................             100            3,872
Goodwill, net...........................................           5,366           12,305
Purchased capitalized software, net.....................           1,052            4,144
Capitalized software development costs, net.............           5,037            4,392
Deferred taxes..........................................           2,090               --
                                                               ---------        ---------
                                                               $ 164,559        $ 175,903
                                                               =========        =========
Liabilities and Stockholders' Equity
Current Liabilities:
   Accounts payable.....................................      $    4,133        $   5,120
   Accrued compensation and benefits....................           7,081            4,271
   Other accrued expenses...............................          18,864            8,085
   Accrued restructuring charge.........................           4,862               --
   Deferred revenues....................................           5,382            4,052
                                                               ---------        ---------
     Total current liabilities..........................          40,322           21,528
                                                               ---------        ---------
Deferred rent...........................................              --               25
Deferred taxes..........................................              --            1,052
Stockholders' Equity:
   Preferred Stock, no par value, 10,000,000 shares
    authorized, none issued.............................              --               --
   Common Stock, no par value, 150,000,000 shares
    authorized; 41,182,058 and 40,729,212 shares issued as
    of June 30, 2001 and December 31, 2000, respectively;
    and 39,499,858 and 40,127,712 shares outstanding as of        87,481           83,370
    June 30, 2001 and December 31, 2000, respectively...
Retained earnings.......................................          55,859           73,949
Deferred compensation...................................            (260)            (405)
Accumulated other comprehensive loss....................          (2,421)          (1,689)
Less treasury stock, at cost............................         (16,422)          (1,927)
                                                               ---------        ---------
     Total stockholders' equity.........................         124,237          153,298
                                                               ---------        ---------
                                                              $  164,559        $ 175,903
                                                               =========        =========

The accompanying notes are an integral part of these statements.`

---

`DENDRITE INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)


                                                                            SIX MONTHS ENDED JUNE 30,
                                                                           2001                    2000
                                                                           ----                    ----
 Operating activities:
    Net income (loss)...........................................           $(18,090)              $ 13,409
    Adjustments to reconcile net income (loss) to net cash
      provided by operating activities:
    Depreciation and amortization...............................              7,237                  5,251
    Asset impairment............................................             12,237                     --
    Amortization of deferred compensation ......................                145                    187
    Deferred income tax benefit.................................             (6,657)                    --
    Tax benefit from exercise of employee stock options.........              1,678                  2,495
      Changes in assets and liabilities, net of effect from
       acquisition:
      (Increase)/decrease in accounts receivable................              8,778                 (6,603)
      Increase in prepaid expenses and other....................               (353)                (1,268)
      Increase in prepaid income taxes..........................             (7,296)                  (262)
      Increase/(decrease) in accounts payable and other accrued
       expenses.................................................             12,961                 (3,686)
      Increase in accrued restructuring charge..................              4,862                     --
      Increase/(decrease) in deferred rent......................                (25)                    42
      Increase/(decrease) in deferred revenues..................              1,435                   (679)
                                                                           --------               --------
        Net cash provided by operating activities...............             16,912                  8,886
                                                                           --------               --------
 Investing activities:
    Purchases and sales of short-term investments, net..........             (4,252)                 7,266
    Acquisitions, net of cash acquired..........................                 --                 (2,318)
    Increase in other non-current assets........................                 --                 (3,450)
    Purchases of property and equipment.........................            (21,756)                (4,563)
    Additions to capitalized software development costs.........             (1,681)                (1,110)
                                                                           --------               --------
        Net cash used in investing activities...................            (27,689)                (4,175)
                                                                           --------               --------
 Financing activities:
    Payments on capital lease obligations.......................                 --                   (176)
    Purchase of treasury stock..................................            (14,495)                    --
    Issuance of common stock....................................              2,433                  5,443
                                                                           --------               --------
        Net cash provided by/(used in) financing activities.....            (12,062)                 5,267
                                                                           --------               --------
 Effect of foreign exchange rate changes on cash................               (337)                  (125)
 Net increase/(decrease) in cash and cash equivalents...........            (23,176)                 9,853
 Cash and cash equivalents, beginning of period.................             73,230                 50,024
                                                                           --------               --------
 Cash and cash equivalents, end of period.......................           $ 50,054               $ 59,877
                                                                           ========               ========

The accompanying notes are an integral part of these statements.`

---

# DENDRITE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

## 1.  Basis of Presentation

The consolidated financial statements of Dendrite International, Inc. and its subsidiaries (the "Company") included in this Form
10-Q are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial position and operating results for the three and six month periods
ended June 30, 2001 and 2000.  For further information, refer to the consolidated financial statements and notes thereto, included in
the Company's Annual Report on Form 10-K for the year ended December 31, 2000.

Our interim operating results may not be indicative of operating results for the full year.

## 2. Net Income (Loss) Per Share

Basic net income (loss) per share was computed by dividing the net income (loss) for each period by the weighted average number
of shares of common stock outstanding for each period.  Diluted net income per share was computed by dividing net income for each
period by the weighted average number of shares of common stock and common stock equivalents outstanding during each period.  For the
three and six month periods ended June 30, 2000, common stock equivalents used in computing diluted net income per share were
2,014,000 and 2,204,000 shares, respectively.  For the three and six month periods ended June 30, 2001, common stock equivalents were
anti-dilutive and were therefore excluded from the computation of net loss per share.

## 3.  Comprehensive Income

Assets and liabilities of the Company's wholly-owned international subsidiaries are translated at their respective period-end
exchange rates and revenues and expenses are translated at average currency exchange rates for the period.  The resulting translation
adjustments are included as "Accumulated other comprehensive loss" and are reflected as a separate component of stockholders'
equity.  Total after-tax comprehensive loss for the three months ended June 30, 2001 was $19,782,000 compared to after-tax
comprehensive income of $7,358,000 for the three months ended June 30, 2000.   Total after-tax comprehensive loss for the six months
ended June 30, 2001 was $18,822,000 compared to after-tax comprehensive income of $13,192,000 for the six months ended June 30, 2000.

## 4.  Restructuring Charge

On June 14, 2001, the Company announced a restructuring of its business operations to reflect a lower expected revenue growth
model in the near term.  The restructuring plan consists of the resizing of the Company's personnel by a reduction of 155 employees
and 35 contractors across various departments in the United States and Europe as well as 192 additional personnel associated with the closing of the Company's facility located in
Stroudsburg, PA.  The Stroudsburg, PA operations are being relocated to the Company's facilities in New Jersey, Virginia and a new
facility to be leased in Bethlehem, PA.  The exit costs have been included in the restructuring charge while the moving and other
start-up costs are not included in this restructuring charge and will continue to be expensed as incurred.

During the second quarter
of 2001, the Company recorded a charge of $6,134,000 associated with its
restructuring. Of this charge, $4,862,000 has not been paid as of June 30, 2001
and is, accordingly, classified as accrued restructuring in the accompanying
consolidated balance sheet. The restructuring charges were determined based upon
formal plans approved by the Companys management using the information
available at the time. Management of the Company believes this provision will be
adequate to cover any costs incurred relating to the restructuring. The Company
anticipates that the majority of the accrued restructuring balance of $4,862,000
as of June 30, 2001 will be paid by December 31, 2001. The activity on the
accrued restructuring charge balance as of June 30, 2001 is summarized in the
table below:

`Accrued Restructuring
                                                          Restructuring Charge  Cash Payment in 2001   as of June 30, 2001
                                                          ------------------    -------------------    -------------------
Termination payments to employees                                $4,213,000             $1,272,000             $2,941,000
Facility exit costs                                                 909,000                     --                909,000
Contract termination and other restructuring costs                1,012,000                     --              1,012,000
                                                          ------------------    -------------------    -------------------
                                                                 $6,134,000             $1,272,000             $4,862,000
                                                          ==================    ===================    ===================`

## 5.  Asset Impairment

During the second quarter of 2001, the Company reviewed the carrying values of its
long-lived assets, including its minority investments in
start-up ventures, identifiable intangibles and goodwill.  During the second quarter of 2001, the Company wrote off $3,450,000 of
cost method investments it had in two start-up ventures due to a permanent impairment in the fair value of these investments.  These
entities have experienced difficulty in raising the additional capital necessary to fund their start-up activities and the situation
at both  became especially acute in the second quarter.

In connection with the Company's announcement on June 14, 2001, relative to its partnership with Oracle Corporation to market an
integrated customer relationship management ("CRM") solution to meet the specialized needs of the worldwide pharmaceutical industry,
the Company's vision and product platform has changed.  The operations acquired through the Company's acquisitions of Associated
Business Computing, N.V. ("ABC") and Analytika, Inc. ("Analytika") have been modified to keep pace with the developing needs of the
ethical pharmaceutical market.  The projected undiscounted future cash flows of these operations are substantially less than the
carrying value of the related long-lived assets, including identifiable intangibles and goodwill.  The fair value of the long-lived
assets was determined based upon the discounted cash flows expected to be derived from these operations.  Management of the Company
believes that these operations will generate negative cash flows over the next several years due to the administrative costs required
to support the projected revenue stream.  Accordingly, the Company recorded an impairment charge of $8,787,000, consisting of
$2,614,000 of purchased capitalized software and $6,173,000 of goodwill.  Relative to the operations acquired as a result of the
Marketing Management International, Inc. ("MMI") acquisition, it is planned that after December 31, 2001, the Company will offer the
mid-tier pharmaceutical industry a product which is more compatible with the Company's vision of integrated CRM solutions.
Accordingly, the Company has reduced the remaining useful life of the purchased capitalized software related to the MMI acquisition
to seven months as of June 2001.  As the operations of the business acquired in the MMI acquisition continue to be successful, no
impairment charge or reduction in life was necessary for the goodwill associated with MMI.

## 6.  Customer and Geographic Segment Data

In the three months ended June 30, 2001, the Company derived approximately 52% of its revenues from its two largest
customers.  In the three months ended June 30, 2000, the Company derived approximately 41% of its revenues from its two
largest customers.  In the six months ended June 30, 2001, the Company derived approximately 48% of its revenues from its two
largest customers.  In the six months ended June 30, 2000, the Company derived approximately 40% of its revenues from its two
largest customers.

The Company is organized by geographic locations and has one reportable segment. All transfers between geographic areas have been
eliminated from consolidated revenues. Operating income consists of total revenues recorded in the location less operating expenses
and does not include interest income, other expense or income taxes. This data is presented in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 131, "Disclosure About Segments of an Enterprise and Related Information".

`For the Three Months Ended June 30,      For the Six Months Ended June 30,
                                            -------------------------------------    ---------------------------------
                                                 2001                2000                 2001              2000
                                            ---------------   -------------------    ---------------    --------------
Revenues:
United States...........                       $40,865,000           $40,453,000        $81,894,000       $76,122,000
All Other...............                        11,097,000            11,278,000         21,948,000        22,671,000
                                            ---------------   -------------------    ---------------    --------------
                                               $51,962,000           $51,731,000       $103,842,000       $98,793,000
                                            ===============   ===================    ===============    ==============
Operating (loss) income:
United States...........                      $(29,331,000)          $10,212,000       $(26,622,000)      $17,219,000
All Other...............                          (918,000)              592,000         (2,206,000)        2,241,000
                                            ---------------   -------------------    ---------------    --------------
                                              $(30,249,000)          $10,804,000       $(28,828,000)      $19,460,000
                                            ===============   ===================    ===============    ==============

                                            June 30, 2001     December 31, 2000
                                            ---------------   -------------------
Identifiable Assets:
United States...........                      $139,086,000          $155,843,000
All Other...............                        25,473,000            20,060,000
                                            ---------------   -------------------
                                              $164,559,000          $175,903,000
                                            ===============   ===================`

For segment reporting purposes, license revenues have been allocated to the sales office of the respective country in which the
sale is made, although the actual contract is with the U.S. entity for legal and tax purposes.

## 7.  Recently Issued Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities."  This statement established accounting and reporting standards for derivative instruments including certain derivative
instruments embedded in other contracts and for hedging activities and was effective January 1, 2001.  The adoption of SFAS No. 133
did not have any impact on the Company's operating results or financial position.

In June 2001 the Financial Accounting Standards Board approved Statement of Financial Accounting Standard No. 141, "Business
Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 prospectively prohibits the pooling of interests
method of accounting for business combinations initiated after June 30, 2001. SFAS No. 142 requires companies to cease amortizing
goodwill that existed at June 30, 2001. The amortization of existing goodwill will cease on December 31, 2001. Any goodwill resulting
from acquisitions completed after June 30, 2001 will not be amortized. SFAS No. 142 also establishes a new method of testing goodwill
for impairment on an annual basis or on an interim basis if an event occurs or circumstances change that would reduce the fair value
of a reporting unit below its carrying value. The adoption of SFAS No. 142 will result in the Company's discontinuation of
amortization of its goodwill which is expected to be approximately $5,000,000 as of January 1, 2002; however, the Company will be
required to test its goodwill for impairment under the new standard beginning in the first half of 2002, which could have an
adverse effect on the Company's future results of operations if an impairment occurs.

## 8.  Common Stock Repurchase Program

On January 31, 2001, the Company announced that its Board of Directors had authorized the Company to repurchase up to
$20,000,000 of its outstanding common stock over a two-year period (the "2001 Stock Repurchase Plan").  Under the 2001 Stock
Repurchase Plan the Company repurchases shares on the open market or in privately negotiated transactions from time to time.
Repurchases of stock under the 2001 Stock Repurchase Plan are at management's discretion, depending upon price and availability.  The
repurchased shares are held as treasury stock, which may be used to satisfy the Company's current and near term requirements under
its equity incentive and other benefit plans and for other corporate purposes.  During the three months ended June 30, 2001, the
Company repurchased 361,800 shares of Company common stock at a purchase price of $4,499,000 under the 2001 Stock Repurchase Plan.
During the six months ended June 30, 2001, the Company repurchased 1,080,700 shares of Company common stock at a purchase price of
$14,495,000 under the 2001 Stock Repurchase Plan.  As of June 30, 2001, the Company had repurchased a total of 1,682,200 shares of
Company common stock at a purchase price of $16,422,000 under all stock repurchase plans, cumulatively.

## 9.  Analytika, Inc. Acquisition

On January 6, 2000, the Company purchased all of the assets and assumed certain liabilities of Analytika, Inc. ("Analytika"), a
provider of advanced analytical products, consulting services and outsourced operations services to the pharmaceutical industry.
Under the terms of the acquisition agreement, the Company paid $2,318,000 in cash, which included transaction costs, and $6,506,000
in the Company's common stock.  The acquisition has been accounted for using the purchase method with the purchase price allocated to
the fair value of the assets acquired and liabilities assumed based on their respective fair market value at the acquisition date.
Of the purchase price, $2,890,000 was allocated to purchased capitalized software development costs.  The excess of the purchase
price over the fair value of the net assets acquired has been allocated to goodwill ($5,979,000) based upon an independent
appraisal.  During the three months ended June 30, 2001, the remaining book value of the capitalized software development costs and
the goodwill relating to the Analytika acquisition was written down to zero due to impairment of the related assets.  See Note 5 above.
Analytika's results of operations have been included in the Company's consolidated financial statements from the date of acquisition.

## 10.  Facility Held for Sale

In April 2001, the Company paid approximately $10,800,000 to purchase a 145,000 square foot building in New Jersey for the
purpose of establishing a new U.S. operations facility to accommodate the Company's growth.  In connection with its restructuring
plan, the Company has since determined to shift its operations to other existing facilities and has therefore resolved to sell the
new facility. See Note 4 to "Notes to Unaudited Financial Statements."  This building is classified as facility held for sale within
the accompanying consolidated balance sheet.

## 11.  Commitments and Contingencies

In the fourth quarter of 2000, the Company entered into a lease agreement for a new facility in Chesapeake, Virginia, with future
minimum rental payments of approximately $15,000,000 over the next 11 years.  The two building facility in Chesapeake is comprised of
approximately 100,000 total square feet.  We expect capital expenditures in connection with tenant improvements, furniture and
fixtures and other capital costs to be incurred through mid 2002.  These expenditures are not expected to exceed $10,000,000 and the
related funding for is expected to be from operating cash flows and existing cash balances.

During the first half of 2001, the Company entered into a lease
for 33,000 square feet of office space in New Jersey.  Tenant improvements such as furniture, fixtures and other capital costs are
not expected to exceed $1,000,000.

## ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.

## FORWARD-LOOKING STATEMENTS

This Form 10-Q contains certain forward-looking statements that are within the meaning of Section 27A of the Securities Act of
1933 and Section 21-E of the Securities Exchange Act of 1934, and are intended to be covered by the safe harbors created by such
acts.  For this purpose, any statements that are not statements of historical fact may be deemed to be forward-looking statements,
including the statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding our
strategy, future operations, future expectations or future estimates, financial position and objectives of management.  Those
statements in this Form 10-Q containing the words "believes", "anticipates", "plans", "expects" and similar expressions constitute
forward-looking statements, although not all forward-looking statements contain such identifying words.  These forward-looking
statements are based on our current expectations, assumptions, estimates and projections about our Company and the pharmaceutical and
consumer packaged goods industries.  All such forward-looking statements involve risks and uncertainties, including those risks
identified under "Factors That May Affect Future Operating Results", many of which are beyond our control.  Although we believe that
the assumptions underlying our forward-looking statements are reasonable, any of the assumptions could be inaccurate and actual
results may differ from those indicated by the forward-looking statements included in this Form 10-Q, as more fully described under
"Factors That May Affect Future Operating Results".  In light of the significant uncertainties inherent in the forward-looking
statements included in this Form 10-Q, you should not consider the inclusion of such information as a representation by us or anyone
else that we will achieve such results.  Moreover, we assume no obligation to update these forward-looking statements to reflect
actual results, changes in assumptions or changes in other factors affecting such forward-looking statements.

## OVERVIEW

The Company provides a comprehensive range of CRM software products and support services to the pharmaceutical industry.  The
Company's solutions combine proprietary software products with extensive system support services, sales force support services,
analytical services and clinical trial services.

The Company generates revenues from both services and licenses.  Service revenues, which account for a substantial portion of our
revenues, consist of fees from a wide variety of contracted services which we make available to our customers, generally under
multi-year contracts. We generate implementation fees from services provided to configure and implement our CRM software products for
our customers. We receive technical and hardware support fees for services related to, among other things, ongoing technical support,
maintenance of our customers' databases, operations of our customers' server computers, maintenance of our customers' remote hardware
and asset control.  Technical and hardware support fees also include fees for software maintenance services such as software defect
resolution and performance enhancements.  We generally charge fees for these maintenance services based on a percentage of total
license fees.  We receive sales force support fees for organizing and managing support of our customers' sales forces, including
training, telephone support and data analysis services. It is our experience that our larger customers increase the amount of
services they purchase from us over time. Fees for these additional services are typically based on the labor and materials used to
provide the applicable service.

We charge our customers license fees to use our proprietary computer software. Customers generally pay one-time perpetual license
fees based upon the number of users, the territory covered and the particular software licensed by the customer.

The Company generally recognizes license fees as revenue using the percentage-of-completion
method over a period of time that commences when we begin configuring the product and ends when the product configuration is complete and it is ready for use in the
field. This period of time usually includes initial customization or configuration and concludes with quality assurance and testing.
When there is no initial customization or configuration, the Company generally recognizes the license fees from those products upon
delivery so long as services to be provided are not essential to the functionality of the software.  Additionally, license revenues are
recognized immediately when the user count for previously delivered software increases.  Historically, the Company's software
licensing agreements provide for a warranty period (typically 180 days from the date of execution of the agreement). The Company's
software maintenance period usually begins immediately after the warranty period.  The portion of the license fee associated with the
warranty period is unbundled from the license fee and is recognized ratably over the warranty period. The Company does not recognize
any license fees unless persuasive evidence of an arrangement exists, delivery has occurred, the license amount is fixed or
determinable and collectability is probable.

The United States, the United Kingdom, France and Japan are currently our primary markets. We bill services provided by our
foreign branches and subsidiaries in local currencies. Operating results generated in local currencies are translated into U.S.
dollars at the average exchange rate in effect for the reporting period.  We generated approximately 21% and 22% of our total
revenues outside the United States during the three months ended June 30, 2001 and 2000, respectively.  We generated approximately
21% and 23% of our total revenues outside the United States during the six months ended June 30, 2001 and 2000, respectively.  Our
operating profits by geographic segment are shown in Note 6 of the "Notes to Unaudited Consolidated Financial Statements."

## RECENT DEVELOPMENTS

During the three months ended June 30, 2001, the Company recorded a series of non-recurring costs, relating to four different
major categories: 1) Restructuring charges, or those costs and expenses associated with resizing our business to a new lower expected
revenue growth in the near term; 2) Asset impairments, which reflect either the write-off or shortened lives of intangible and other
non-current assets; 3) Other non-recurring charges, which relate primarily to facility moves and other associated costs which are not
included within restructuring charges; and 4) CRM start-up costs, which relate to the launching of our new partnership with Oracle
Corporation and includes our longitudinal data within a broad based offering.  The total charges related to these four categories is
expected to be approximately $42,000,000, of which approximately $28,000,000 is expected to be from cash expenditures.

The restructuring plan consists of the resizing of the Company's personnel as well as the closing of its facility located in
Stroudsburg, PA.  This will result in a reduction of 155 employees and 35 contractors across various departments in the United States
and Europe as well as 192 additional personnel associated with the closing of the Company's facility in Stroudsburg, PA.  The Stroudsburg, PA operations are being relocated to the Company's facilities in New Jersey, Virginia and a new
facility to be leased in Bethlehem, PA.  The exit costs have been included in the restructuring charge while the moving and other
start-up costs are not included in this restructuring charge and will continue to be expensed as incurred.  During the second quarter
of 2001, the Company recorded a charge of $6,134,000 associated with this restructuring.  Of this charge, $4,862,000 has not been
paid as of June 30, 2001 and is, accordingly, classified as accrued restructuring in the accompanying consolidated balance sheets.
The restructuring charges were determined based upon formal plans approved by the Company's management using the information
available at the time.  Management of the Company believes this provision will be adequate to cover any costs incurred relating to
the restructuring.  The Company anticipates that the majority of the accrued restructuring balance of $4,862,000 as of June 30, 2001
will be paid by December 31, 2001.  See Note 4 to "Notes to Unaudited Consolidated Financial Statements."

During the second quarter of 2001, the Company reviewed the carrying values of its long-lived assets, including its minority
investments in start-up ventures, identifiable intangibles and goodwill.  During the second quarter of 2001, the Company wrote off
$3,450,000 of cost method investments it had in two start-up ventures due to a permanent impairment in the fair value of these
investments.  These entities have experienced difficulty in raising the additional capital necessary to fund their start-up
activities and the situation at both became especially acute in the second quarter.

In connection with the Company's announcement on June 14, 2001, relative to its partnership with Oracle Corporation to market an
integrated CRM solution to meet the specialized needs of the worldwide pharmaceutical industry, the Company's vision and product
platform has changed.  The operations acquired through the Company's acquisitions of ABC and Analytika have been  modified to keep
pace with the developing needs of the ethical pharmaceutical market. The projected undiscounted future cash flows of these operations
are substantially less than the carrying value of the related long-lived assets, including identifiable intangibles and goodwill.
The fair value of the long-lived assets was determined based upon the discounted cash flows expected to be derived from these
operations.  Management of the Company believes that these operations will generate negative cash flows over the next several years
due to the administrative costs required to support the projected revenue stream.  Accordingly, the Company recorded an impairment
charge of $8,787,000, consisting of $2,614,000 of purchased capitalized software and $6,173,000 of goodwill.  Relative to the
operations acquired as a result of the MMI acquisition, it is planned that after December 31, 2001, the Company will offer the
mid-tier pharmaceutical industry a product which is more compatible with the Company's vision of integrated CRM solutions.
Accordingly, the Company has reduced the remaining useful life of the purchased capitalized software related to the MMI acquisition
to seven months as of May 31, 2001.  As the operations of the business acquired in the MMI acquisition continue to be successful, no
impairment charge or reduction in life was necessary for the goodwill associated with MMI.

As a result of our decision to relocate our operations to multiple new facilities, we have and will continue to incur significant
costs.  These costs primarily relate to start-up costs relating to our new Chesapeake, VA and Bethlehem, PA facilities, and the
transfer of our operations from Stroudsburg, PA to these and other locations.  These costs include, among other things, duplicate
lease costs, relocation, retention and moving costs.  Also included within these costs is the recognition of future losses on
selected contracts that were identified as we examined the relocation of help desk services to Chesapeake, VA.  During the three
months ended June 30, 2001, we incurred other non-recurring costs of approximately $5,905,000.  We expect to incur approximately
$13,000,000 of additional non-recurring costs during the remainder of 2001, with approximately $5,500,000 to be incurred in the third
quarter and approximately $7,500,000 to be incurred in the fourth quarter.

In connection with our CRM initiative with Oracle Corporation, we have incurred two types of significant start-up costs.  We have
incurred significant marketing and advertising costs associated with the launch of the venture and expenditures relating to the up-
front investment in the pharmacy data necessary for the analytical portion of the product offering.  During the three months ended
June 30, 2001, we expensed CRM start-up costs of approximately $2,000,000.  We expect to incur approximately $3,000,000 of additional
CRM startup costs during the remainder of 2001, with approximately $1,500,000 to be incurred in each of the third and fourth quarters of 2001.

## RESULTS OF OPERATIONS

## THREE MONTHS ENDED JUNE 30, 2001 AND 2000

REVENUES.  Total revenues increased $231,000 to $51,962,000 in the three months ended June 30, 2001, an increase of less than 1%
from revenues of $51,731,000 in the three months ended June 30, 2000.

License fee revenues decreased $1,777,000 to $4,273,000 in the three months ended June 30, 2001, a decrease of 29% from $6,050,000
in the three months ended June 30, 2000.  License fee revenues as a percentage of total revenues were 8% in the three months ended
June 30, 2001, as compared to 12% in the three months ended June 30, 2000.  The decrease in license fee revenues was the result of
fewer sales to new pharmaceutical customers in the United States.  Additionally, a major client chose to structure its system upgrade
into three phases, causing delays in revenues during the quarter.

Service revenues increased $2,008,000 to $47,689,000 in the three months ended June 30, 2001, an increase of 4% from $45,681,000 in
the three months ended June 30, 2000.  Service revenues as a percentage of total revenues were 92% in the three months ended June 30,
2001, as compared to 88% in the three months ended June 30, 2000.  The increase in service revenues was primarily the result of an
increase in the number of installed users of Dendrite sales force software products at both new and existing customers, as well as
the provision of additional services for our existing customers.

COST OF REVENUES.  Total cost of revenues increased $12,774,000 to $34,854,000 in the three months ended June 30, 2001, up 58% from
$22,080,000 in the three months ended June 30, 2000.

Cost of license fees increased $68,000 to $1,198,000 in the three months ended June 30, 2001, up 6% from $1,130,000 in the three
months ended June 30, 2000.  Cost of license fees for the three months ended June 30, 2001 is comprised of the amortization of
purchased software and capitalized software development costs of $884,000 and third party vendor license fees of $314,000.  Cost of
license fees for the same period in 2000 is comprised of the amortization of purchased software and capitalized software development
costs of $697,000 and third party vendor license fees of $433,000.  The costs associated with third party vendor licenses decreased
due to the decrease in license fee revenue during the period.

During the three months ended June 30, 2001, the Company recorded an impairment charge of $2,614,000 related to its purchased
capitalized software costs from its acquisitions of Analytika and ABC.  These operations have been modified to keep pace with the
developing needs of the ethical pharmaceutical market.  The projected undiscounted future cash flows of these operations are
substantially less than the carrying value of the related long-lived assets, including identifiable intangibles and goodwill.  The
fair value of the long-lived assets was determined based upon the discounted cash flows expected to be derived from these
operations.  Management of the Company believes that these operations will generate negative cash flows over the next several years
due to the administrative costs required to support the projected revenue stream.  See Notes 4 and 5 of "Notes to Unaudited
Consolidated Financial Statements" and "Recent Developments" above and "Restructuring Charge" and "Asset Impairment" below for a
discussion of the restructuring charges and asset impairments recorded in the three months ended June 30, 2001.

Cost of services increased $10,092,000 to $31,042,000 in the three months ended June 30, 2001, up 48% from $20,950,000 in the
three months ended June 30, 2000.  This increase was due to a combination of factors, including $3,053,000 of non-recurring costs,
which related to the recognition of future losses on selected contracts for which we expect the costs of providing the future
services will exceed the revenue to be received from the performance of the services which was identified while examining the restructuring
of our Stroudsburg, PA facility.  The remaining increase in cost of services was
primarily due to overstaffing within our service areas in anticipation of higher levels of growth than were realized during the first
six months of 2001.

Total gross margin for the three months ended June 30, 2001 was 33%, down from 57% for the three months ended June 30, 2000.  The
margin was impacted significantly by the $2,614,000 asset impairment and $3,053,000 of non-recurring costs within costs of services.
If not for the effects of these items, the gross margin would have been 44% for the three months ended June 30, 2001.  This was
significantly lower than the gross margin during the three months ended June 30, 2000, primarily due to overstaffing within our
service areas in anticipation of higher levels of growth than were realized during the first six months of 2001 as discussed above.

SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES. SG&A expenses increased $12,486,000 to $28,632,000 in the three months ended
June 30, 2001, up 77% from $16,146,000 in the three months ended June 30, 2000.  As a percentage of revenues, SG&A expenses increased
to 55% in the three months ended June 30, 2001, up from 31% in the three months ended June 30, 2000.  The increase in SG&A expenses
for the period ended June 30, 2001 was primarily attributable to $2,000,000 of costs associated with the Company's CRM launch in
partnership with Oracle Corporation, $2,800,000 of costs relating to the transition of services from its New Jersey facility to its
new facility in Chesapeake, Virginia, and approximately $7,700,000 of costs related to the strengthening of our corporate
infrastructure which includes, among other things, investment in senior management and our global sales organization.

RESEARCH AND DEVELOPMENT (R&D) EXPENSES.  R&D expenses increased $267,000 to $2,968,000 in the three months ended June 30, 2001, up
10% from $2,701,000 in the three months ended June 30, 2000.  As a percentage of revenues, R&D expenses increased to 6% in the three
months ended June 30, 2001, up from 5% in the three months ended June 30, 2000.  With respect to future research and development
expenses, subject to market conditions, we currently anticipate that such expenses will be approximately 4% to 6% of revenues for the
remainder of 2001.

RESTRUCTURING
CHARGE. On June 14, 2001, the Company announced a restructuring of its business
operations to reflect a lower expected revenue growth model in the near term.
The restructuring plan consists of the resizing of the Companys personnel
as well as the closing of its facility located in Stroudsburg, PA. The
Stroudsburg, PA operations are being relocated to the Companys facilities
in New Jersey, Virginia and a new facility to be leased in Bethlehem, PA. The
exit costs have been included in the restructuring charge while the moving and
other start up costs are not included in this restructuring charge and will
continue to be expensed as incurred.

During the second quarter of 2001, the Company recorded a charge of $6,134,000 associated with this restructuring.  The
restructuring charges were determined based upon formal plans approved by the Company's management using the information available at
the time.  Management of the Company believes this provision will be adequate to cover any costs incurred relating to the
restructuring.  See Note 4 of "Notes to Unaudited Consolidated Financial Statements."

ASSET
IMPAIRMENT.  During the second quarter of 2001, the Company reviewed the carrying
values of its long-lived assets, including its minority investments in start-up ventures,
identifiable intangibles and goodwill. During the second quarter of 2001, the
Company wrote off $3,450,000 of cost method investments it had in two start-up
ventures due to a permanent impairment in the fair value of these investments.
These entities have experienced difficulty in raising the additional capital
necessary to fund their start-up activities and the situation at both became
especially acute in the second quarter.

In connection with the Company's announcement on June 14, 2001, relative to its partnership with Oracle Corporation to market an
integrated CRM solution to meet the specialized needs of the worldwide pharmaceutical industry, the Company's vision and product
platform has changed.  The operations acquired through the Company's acquisitions of ABC and Analytika have been modified to keep
pace with the developing needs of the ethical pharmaceutical market.  The projected undiscounted future cash flows of these
operations are substantially less than the carrying value of the related long-lived assets, including identifiable intangibles and
goodwill.  The fair value of the long-lived assets was determined based upon the discounted cash flows expected to be derived from
these operations.  Management of the Company believes that these operations will generate negative cash flows over the next several
years due to the administrative costs required to support the projected revenue stream.  Accordingly, the Company recorded an
impairment charge of $8,787,000, consisting of $2,614,000 of purchased capitalized software and $6,173,000 of goodwill.  Relative to
the operations acquired as a result of the MMI acquisition, it is planned that after December 31, 2001, the Company will offer the
mid-tier pharmaceutical industry a product which is more compatible with the Company's vision of integrated CRM solutions.
Accordingly, the Company has reduced the remaining useful life of the purchased capitalized software related to the MMI acquisition
to seven months as of May 31, 2001.  As the operations of the business acquired in the MMI acquisition continue to be successful, no
impairment charge or reduction in life was necessary for the goodwill associated with MMI.  See Note 5 of "Notes to Unaudited
Consolidated Financial Statements."

PROVISION
FOR INCOME TAXES.  The effective tax benefit recorded in the three months ended
June 30, 2001 was 34%, as compared with an effective tax expense of 36% in the
three months ended June 30, 2000. This decrease resulted from the write-off of
certain goodwill amounts which are not deductible for tax purposes.

## SIX MONTHS ENDED JUNE 30, 2001 AND 2000

REVENUES.  Total revenues increased $5,049,000 to $103,842,000
in the six months ended June 30, 2001, an increase of 5% from
$98,793,000 in the six months ended June 30, 2000.

License fee revenues decreased $4,383,000 to $7,276,000 in the six months ended June 30, 2001, a decrease of 38% from $11,659,000
in the six months ended June 30, 2000.  License fee revenues as a percentage of total revenues were 7% in the six months ended June
30, 2001, as compared to 12% in the six months ended June 30, 2000.  The decrease in license fee revenues was the result of fewer
sales to new pharmaceutical customers in the United States.  Additionally, a major client chose to structure its system upgrade into
three phases, causing delays in revenues during the period.

Service revenues increased $9,432,000 to $96,566,000 in the six months ended June 30, 2001, an increase of 11% from $87,134,000 in
the six months ended June 30, 2000.  Service revenues as a percentage of total revenues were 93% in the six months ended June 30,
2001, as compared to 88% in the six months ended June 30, 2000.  The increase in service revenues was primarily the result of an
increase in the number of installed users of Dendrite sales force software products at both new and existing customers, as well as
the provision of additional services for our existing customers.  Also contributing to the increase was a one-time payment relating
to a contractual adjustment from an existing customer that recently merged with another company.

COST OF REVENUES.  Total cost of revenues increased $19,574,000 to $61,983,000 in the six months ended June 30, 2001, an increase of
46% from $42,409,000 in the six months ended June 30, 2000.

Cost of license fees increased $286,000 to $2,161,000 in the six months ended June 30, 2001, an increase of 15% from $1,875,000 in
the six months ended June 30, 2000.  Cost of license fees for the six months ended June 30, 2001 is comprised of the amortization of
purchased software and capitalized software development costs of $1,688,000 and third party vendor license fees of $473,000.  Cost of
license fees for the same period in 2000 is comprised of the amortization of purchased software and capitalized software development
costs of $1,428,000 and third party vendor license fees of $447,000.  The costs associated with third party vendor licenses increased
due to an increase in the number of third party software products embedded in our WebForce product.

During the six months ended June 30, 2001, the Company recorded an impairment charge of $2,614,000 related to its purchased
capitalized software costs from its acquisitions of Analytika and ABC.  These operations have been modified to keep pace with the
developing needs of the ethical pharmaceutical market.  The projected undiscounted future cash flows of these operations are
substantially less than the carrying value of the related long-lived assets, including identifiable intangibles and goodwill.  The
fair value of the long-lived assets was determined based upon the discounted cash flows expected to be derived from these
operations.  Management of the Company believes that these operations will generate negative cash flows over the next several years
due to the administrative costs required to support the projected revenue stream.  See Notes 4 and 5 of "Notes to Unaudited
Consolidated Financial Statements" and "Recent Developments" above and "Restructuring Charge" and "Asset Impairment" below for a
discussion of the restructuring charges and asset impairments recorded in the six months ended June 30, 2001.

Cost of services increased $16,674,000 to $57,208,000 in the six months ended June 30, 2001, up 41% from $40,534,000 in the six
months ended June 30, 2000.  This increase was due to a combination of factors, including $3,053,000 of non-recurring costs, which
related to the recognition of future losses on selected contracts for which we expect the costs of providing the future services will
exceed the revenue to be received from the performance of the services, which was identified while examining the restructuring of our Stroudsburg, PA facility.  The remaining increase in cost of services was primarily due
to overstaffing within our service areas in anticipation of higher levels of growth than were realized during the first six months of 2001.

Total gross margin for the six months ended June 30, 2001 was 40%, down from 57% for the six months ended June 30, 2000.  The
margin was impacted significantly by the $2,614,000 asset impairment and $3,053,000 of non-recurring costs within costs of services.
If not for the effects of these items, the gross margin would have been 46% for the six months ended June 30, 2001.  This was
significantly lower than the gross margin during the six months ended June 30, 2000, primarily due to overstaffing within our service
areas in anticipation of higher levels of growth than were realized during the first half of 2001.

SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES.;   SG&A expenses increased $17,511,000 to $49,095,000 in the six months ended
June 30, 2001, up 55% from $31,584,000 in the six months ended June 30, 2000.  As a percentage of revenues, SG&A expenses increased
to 47% in the six months ended June 30, 2001, as compared with 32% in the six months ended June 30, 2000.  The increase in SG&A
expenses for the period ended June 30, 2001 was caused by several factors, most notably $2,000,000 of costs associated with the
Company's CRM launch in partnership with Oracle Corporation, $2,800,000 of costs relating to the transition of services to its
new facility in Chesapeake, Virginia, and approximately $12,700,000 of costs related to the strengthening of our corporate
infrastructure which includes, among other things investment in senior management, and our global sales organization.

RESEARCH AND DEVELOPMENT (R&D) EXPENSES.  R&D expenses increased $495,000 to $5,835,000 in the six months ended June 30, 2001, an
increase of 9% from $5,340,000 in the six months ended June 30, 2000.  As a percentage of revenues, R&D expenses increased to 6% in
the six months ended June 30, 2001, up from 5% in the six months ended 2000.

RESTRUCTURING CHARGE.  On June 14, 2001, the Company announced a restructuring of its business operations to reflect a lower
expected revenue growth model in the near term.  The restructuring plan consists of the resizing of the Company's personnel as well as the closing of its facility located in Stroudsburg, PA.  The
Stroudsburg, PA operations are being relocated to the Company's facilities in New Jersey, Virginia and a new facility to be leased in
Bethlehem, PA.  The exit costs have been included in the restructuring charge while the moving and other start-up costs are not
included in this restructuring charge and will continue to be expensed as incurred.

During the six months ended June 30, 2001, the Company recorded a charge of $6,134,000 associated with its restructuring.    The
restructuring charges were determined based upon formal plans approved by the Company's management using the information available at
the time.  Management of the Company believes this provision will be adequate to cover any costs incurred relating to the
restructuring.  See Note 4 of "Notes to Unaudited Consolidated Financial Statements."

ASSET
IMPAIRMENT. During the six months ended June 30, 2001, the Company reviewed the
carrying values of its long-lived assets, including its minority investments in start-up
ventures, identifiable intangibles and goodwill. During the six months ended
June 30, 2001, the Company wrote off $3,450,000 of cost method investments it
had in two start-up ventures due to a permanent impairment in the fair value of
these investments. These entities have experienced difficulty in raising the
additional capital necessary to fund their start-up activities and the situation
at both became especially acute in the second quarter.

In connection with the Company's announcement on June 14, 2001, relative to its partnership with Oracle Corporation to market an
integrated CRM solution to meet the specialized needs of the worldwide pharmaceutical industry, the Company's vision and product
platform has changed.  The operations acquired through the Company's acquisitions of ABC and Analytika have been modified
to keep pace with the developing needs of the ethical pharmaceutical market.  The projected undiscounted future cash flows of these operations are substantially less than
the carrying value of the related long-lived assets, including identifiable intangibles and goodwill.  The fair value of the
long-lived assets was determined based upon the discounted cash flows expected to be derived from these operations.  Management of
the Company believes that these operations will generate negative cash flows over the next several years due to the administrative
costs required to support the projected revenue stream.  Accordingly, the Company recorded an impairment charge of $8,787,000,
consisting of $2,614,000 of purchased capitalized software and $6,173,000 of goodwill.  Relative to the operations acquired as a
result of the MMI acquisition, it is planned that after December 31, 2001 the Company will offer the mid-tier pharmaceutical industry a product which
is more compatible with the Company's vision of integrated CRM solutions.  Accordingly, the Company has reduced the remaining useful life of the purchased capitalized software related to the MMI
acquisition to seven months as of June, 2001.  As the operations of the business acquired in the MMI acquisition continue to be
successful, no impairment charge or reduction in life was necessary for the goodwill associated with MMI.  See Note 5 of "Notes to
Unaudited Consolidated Financial Statements."

PROVISION
FOR INCOME TAXES.  The effective tax benefit recorded in six months ended June
30, 2001 was 34%, as compared with an effective tax expense of 36% in the six
months ended June 30, 2000. This decrease resulted from the write-off of certain
goodwill amounts which are not deductible for tax purposes.

## LIQUIDITY AND CAPITAL RESOURCES

We finance our operations primarily through cash generated by operations.  Net cash provided by operating activities was
$16,912,000 for the six months ended June 30, 2001, compared to cash provided by operating activities of $8,886,000 for the six
months ended June 30, 2000.  This increase in cash provided by operating activities was due primarily to a decrease in accounts
receivable, an increase in accounts payable and accrued expenses and an increase in deferred revenue, partially offset by the net
loss of $18,090,000 for the six months ended June 30, 2001.

Cash used in investing activities was $27,689,000 in the six months ended June 30, 2001, compared to cash used in investing
activities of $4,175,000 in the six months ended June 30, 2000.  The significant increase was due primarily to our purchase of a new
building and tenant improvements made to our new data center facility during the six months ended June 30, 2001 as well as our sales
of short-term investments in 2000, partially offset by cash used for acquisitions in 2000.

Cash used in financing  activities  was  $12,062,000  in the six months ended June 30, 2001, compared to cash provided by financing
activities  of  $5,267,000  in the six months ended June 30, 2000.  The  difference  of  $17,239,000  was primarily due to purchases of
common stock under the stock  repurchase  program  announced on January 31, 2001, and an overall  decrease in the level of stock option
exercises during the period.

We maintain a $15,000,000 revolving line of credit agreement with The Chase Manhattan Bank, N.A.  The agreement is available to
finance working capital needs and possible future acquisitions.  The terms of this agreement require us to maintain a minimum
consolidated net worth, among other covenants, measured quarterly, which is equal to our net worth as of December 31, 1997 plus 50%
of net income earned after January 1, 1998 plus 75% of the net proceeds of any stock offerings (as defined in the agreement).  This
covenant effectively limits the amount of cash dividends we may pay.  The line of credit expires on November 30, 2001.  At June 30,
2001, there were no borrowings outstanding under the agreement and we were in compliance with all of our covenant obligations.

At June 30, 2001, our working capital was approximately $77,976,000.  We believe that available funds, anticipated cash flows from
operations and our line of credit will satisfy our currently projected working capital and capital expenditure requirements,
exclusive of cash required for possible acquisitions of businesses, products and technologies, for the foreseeable future.

During the six months ended June 30, 2001, the Company purchased 1,080,700 shares of its
 common stock at a cost of $14,495,000
under the existing stock repurchase program.

In the second quarter of 2001, the Company spent approximately $10,800,000 to purchase a 145,000 square foot building in New
Jersey for the purpose of establishing a new U.S. operations facility to accommodate the Company's growth.  The Company has
determined to shift its operations to other existing facilities in connection with its restructuring plan, and therefore has resolved
to hold the new facility for sale. See Note 4 and 10 of to Notes to Consolidated Unaudited Financial Statements.

During the fourth quarter of 2000, the Company entered into a lease agreement for a new facility in Chesapeake, Virginia, with
future minimum rental payments of approximately $15,000,000 over the next 11 years.  The two building facility is comprised of
approximately 100,000 total square feet.  We expect capital expenditures in connection with tenant improvements, furniture and
fixtures and other capital costs to be incurred through mid 2002. Funding for these expenditures is expected to be from
operating cash flows and existing cash balances.

During the first half of 2001, the Company entered into a lease for 33,000 square feet of office
space in New Jersey.  Tenant improvements, such as furniture, fixtures and other capital costs are not expected to exceed $1,000,000.

We regularly evaluate opportunities to acquire products or businesses complementary to our operations. Such acquisition
opportunities, if they arise, and are successfully completed, may involve the use of cash or equity instruments.

## FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

## OUR BUSINESS IS HEAVILY DEPENDENT ON THE PHARMACEUTICAL INDUSTRY

Most of our CRM products and services are currently used in connection with the marketing and sale of prescription-only drugs.
This market is undergoing a number of significant changes. These include:

- the significant consolidation of the pharmaceutical industry as well as the timing and sequencing of sales to our customers
              may reduce the number of our existing and potential customers;
- regulatory changes that permit the over-the-counter sale of formerly prescription-only drugs; and
- competitive pressure on the pharmaceutical industry resulting from the
continuing shift to delivery of healthcare through managed care organizations.

We cannot assure you that we can respond effectively to any or all of these and other changes in the marketplace. Our failure to
do so could have a material adverse effect on our business, operating results or financial condition.

## OUR QUARTERLY RESULTS OF OPERATIONS MAY FLUCTUATE SIGNIFICANTLY AND MAY NOT MEET MARKET EXPECTATIONS

Our results of operations may vary from quarter to quarter due to lengthy sales and implementation cycles for our products, our
fixed expenses in relation to our fluctuating revenues and variations in our customers' budget cycles, each of which is discussed
below. As a result, you should not rely on quarter-to-quarter comparisons of our results of operations as an indication of future
performance. It is also possible that in some future period our results of operations may be below our targeted goals and the
expectations of the public market analysts and investors. If this happens, the price of our common stock may decline.

## OUR LENGTHY SALES AND IMPLEMENTATION CYCLES MAKE IT DIFFICULT TO PREDICT OUR QUARTERLY REVENUES

The selection of a CRM solution generally entails an extended decision-making process because of the strategic implications and
substantial costs associated with a customer's license of the solution. Given the importance of the decision, senior levels of
management often are involved and, in some instances, its board of directors may be involved in this process. As a result, the
decision-making process typically takes nine to eighteen months, and in certain cases even longer. Accordingly, we cannot control or
predict the timing of our execution of contracts with customers.

In addition, an implementation process of three to six or more months before the software is rolled out to a customer's sales
force is customary. However, if a customer were to delay or extend its implementation process, our quarterly revenues may decline
below expected levels and could adversely affect our results of operations.

## OUR FIXED COSTS MAY LEAD TO FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS IF REVENUES FALL BELOW EXPECTATIONS

We establish our expenditure levels for product development, sales and marketing and some of our other operating expenses based in
large part on our expected future revenues and anticipated competitive conditions. In particular, we frequently add staff in advance
of new business to permit adequate time for training. If the new business is subsequently delayed, canceled or not awarded, we will
have incurred expenses without the associated revenues. In addition, we may increase sales and marketing expenses if competitive
pressures become greater than originally anticipated.  Since only a small portion of our expenses varies directly with our actual
revenues, our operating results and profitability are likely to be adversely and disproportionately affected if our revenues fall
below our targeted goals or expectations.

## OUR BUSINESS IS AFFECTED BY VARIATIONS IN OUR CUSTOMERS' BUDGET CYCLES

We have historically realized a greater percentage of our license fees and service revenues in the second half of the year than in
the first half because, among other things, our customers typically spend more of their annual budget authorization for CRM solutions
in the second half of the year. However, the relationship between the amounts spent in the first and second halves of a year may vary
from year to year and from customer to customer. In addition, changes in our customers' budget authorizations may reduce the amount
of revenues we receive from the license of additional software or the provision of additional services. As a result, our operating
results could be adversely affected.

## WE DEPEND ON A FEW MAJOR CUSTOMERS FOR A SIGNIFICANT PORTION OF OUR REVENUES

We derive a significant portion of our revenues from a limited number of customers for which there is substantial competition.
Some of our customers have switched, and in the future other customers may switch, to software products and/or services offered by
our competitors or by in-house staff.

## WE MAY BE UNABLE TO SUCCESSFULLY INTRODUCE NEW PRODUCTS OR RESPOND TO
TECHNOLOGICAL CHANGE

The market for CRM products changes rapidly because of frequent improvements in computer hardware and software technology. Our
future success will depend, in part, on our ability to:

- use  available  technologies  and data sources to develop new  products  and services and to enhance our current  products and
              services;
- introduce new solutions that keep pace with developments in our target markets; and
- address the changing and increasingly sophisticated needs of our customers.

We cannot assure you that we will successfully develop and market new products or product enhancements that respond to
technological advances in the marketplace, or that we will do so in a timely fashion. We also cannot assure you that our products
will adequately and competitively address the needs of the changing marketplace.

Competition for software products has been characterized by shortening product cycles. We may be materially and adversely affected
by this trend if the product cycles for our products prove to be shorter than we anticipate. If that happens, our business, operating
results or financial condition could be adversely affected.

To remain competitive, we also may have to spend more of our revenues on product research and development than we have in the
past. As a result, our results of operations could be materially and adversely affected.

Further, our software products are technologically complex and may contain previously undetected errors or failures. Such errors
have occurred in the past and we cannot assure you that, despite our testing, our new products will be free from errors. Errors that
result in losses or delays could have a material adverse effect on our business, operating results or financial condition.

## INCREASED COMPETITION MAY RESULT IN PRICE REDUCTIONS AND DECREASED DEMAND FOR OUR PRODUCTS AND SERVICES

We believe there are a number of other companies that sell CRM products and related services that specifically target the
pharmaceutical industry, including:

- certain competitors that are actively selling CRM software products in more than one country; and
- certain competitors that also offer CRM support services.

We believe that sales force automation or SFA and CRM software products and/or services offered by most of our competitors do not
address the variety of pharmaceutical customer needs that our solutions address.  We also face competition from many vendors that
market and sell SFA and CRM solutions in the CPG market. In addition, we also compete with various companies that provide support
services similar to our services. We believe our ability to compete depends on many factors, some of which are beyond our control,
including:

- the number and success of new market entrants supplying competing CRM products or support services;
- expansion of product lines by, or consolidation among, our existing competitors; and
- development and/or operation of in-house CRM software products or services by our customers and potential customers.

Some of our competitors and potential competitors are part of large corporate groups and have significantly greater financial,
sales, marketing, technology and other resources than we have. We cannot assure you that we will be able to compete successfully with
these companies or that competition will not have a material adverse effect on our business, operating results or financial
condition.

## OUR INTERNATIONAL OPERATIONS HAVE RISKS THAT OUR DOMESTIC OPERATIONS DO NOT

The sale of our products and services in foreign countries accounts for, and is expected in the future to account for, a material
part of our revenues. These sales are subject to risks inherent in international business activities, including:

- any adverse change in the political or economic environments in these countries;
- any adverse change in tax, tariff and trade or other regulations;
- the absence or significant lack of legal protection for intellectual property rights;
- exposure to exchange rate risk for service revenues which are denominated in currencies other than U.S. dollars; and
- difficulties in managing an organization spread over various jurisdictions.

## WE MAY FACE RISKS ASSOCIATED WITH ACQUISITIONS

Our business could be materially and adversely affected as a result of the risks associated with acquisitions.  As part of our
business strategy, we have acquired businesses that offer complementary products, services or technologies.   These acquisitions are
accompanied by the risks commonly encountered in an acquisition of a business, including:

- the effect of the acquisition on our financial and strategic position;
- the failure of an acquired business to further our strategies;
- the difficulty of integrating the acquired business;
- the diversion of our management's attention from other business concerns;
- the impairment of relationships with customers of the acquired business;
- the potential loss of key employees of the acquired company; and
- the maintenance of uniform, company-wide standards, procedures and policies.

These factors could have a material adverse effect on our revenues and earnings.  We expect that the consideration paid for
future acquisitions, if any, could be in the form of cash, stock, rights to purchase stock, or a combination of these.  To the extent
that we issue shares of stock or other rights to purchase stock in connection with any future acquisition, existing shareholders will
experience dilution and potentially decreased earnings per share.

## OUR SUCCESS DEPENDS ON RETAINING OUR KEY SENIOR MANAGEMENT TEAM AND ON
ATTRACTING AND RETAINING QUALIFIED PERSONNEL

Our future success depends, to a significant extent, upon the contributions of our executive officers and key sales, technical and
customer service personnel.  Our future success also depends on our continuing ability to attract and retain highly qualified
technical and managerial personnel. Competition for such personnel is intense. We have at times experienced difficulties in
recruiting qualified personnel and we may experience such difficulties in the future. Any such difficulties could adversely affect
our business, operating results or financial condition.

## OUR INABILITY TO MANAGE OUR GROWTH COULD ADVERSELY AFFECT OUR BUSINESS

To manage our growth effectively we must continue to strengthen our operational, financial and management information systems and
expand, train and manage our work force. However, we may not be able to do so effectively or on a timely basis. Failure to do so
could have a material adverse effect upon our business, operating results or financial condition.

## OUR BUSINESS DEPENDS ON PROPRIETARY TECHNOLOGY THAT WE MAY NOT BE ABLE TO
PROTECT COMPLETELY

We rely on a combination of trade secret, copyright and trademark laws, non-disclosure and other contractual agreements and
technical measures to protect our proprietary technology. We cannot assure you that the steps we take will prevent misappropriation
of this technology. Further, protective actions we have taken or will take in the future may not prevent competitors from developing
products with features similar to our products. In addition, effective copyright and trade secret protection may be unavailable or
limited in certain foreign countries. We have, on occasion, in response to a request by our customer, entered into agreements which
require us to place our source code in escrow to secure our service and maintenance obligations.

Further, we believe that our products and trademarks do not infringe upon the proprietary rights of third parties. However, third
parties may assert infringement claims against us in the future that may result in the imposition of damages or injunctive relief
against us. In addition, any such claims may require us to enter into royalty arrangements. Any of these results could materially and
adversely affect our business, operating results or financial condition.

## THERE ARE CHARACTERISTICS IN THE CONSUMER PACKAGED GOODS MARKET THAT DIFFER FROM THE PHARMACEUTICAL MARKET

We market and sell CRM solutions to companies in the CPG market. The selling environment in this market has unique characteristics
that differentiate it from the pharmaceutical market. In addition, we believe that the CPG market is composed of sub-markets, each of
which may have unique characteristics. Accordingly, we cannot assure you that we will be able to replicate in this market the success
we have achieved in the ethical pharmaceutical market.

## PROVISIONS OF OUR CHARTER DOCUMENTS AND NEW JERSEY LAW MAY DISCOURAGE AN ACQUISITION OF DENDRITE

Provisions of our Restated Certificate of Incorporation, as amended, our By-laws, as amended, and New Jersey law may make it more
difficult for a third party to acquire us.  For example, the Board of Directors may, without the consent of the stockholders, issue
preferred stock with rights senior to those of the common stock.  In addition, the Company has a shareholder rights plan which may
limit the ability of a third party to attempt a hostile acquisition of the Company.

## OUR COMMON STOCK MAY BE SUBJECT TO PRICE FLUCTUATIONS

The market price of our common stock may be significantly affected by the following factors:

- the announcement or the introduction of new products by us or our competitors;
- quarter-to-quarter  variations  in our  operating  results  or  changes  in  earnings  estimates  or failure to meet or exceed
              earnings estimates;
- market conditions in the technology, healthcare and other growth sectors; and
- general consolidation in the healthcare information industry which may result in
the market perceiving us or other comparable companies as potential acquisition
targets.

Further, the stock market has experienced on occasion extreme price and volume fluctuations. The market prices of the equity
securities of many technology companies have been especially volatile and often have been unrelated to the operating performance of
such companies. These broad market fluctuations may have a material adverse effect on the market price of our common stock.

## PART II.  OTHER INFORMATION

## ITEM 4. Submission of Matters to a Vote of Security Holders

The Companys Annual
Meeting of Shareholders was held on May 15, 2001 (the Annual
Meeting). The following proposals were considered and voted upon at the
Annual Meeting:

1.  Election of Directors.  The following directors were nominated for election to the Board of Directors until the next
Annual Meeting or until their successors are duly chosen and qualified:  John E. Bailye, Bernard M. Goldsmith, Edward J. Kfoury, Paul
A. Margolis, John H. Martinson, Terence H. Osborne and Patrick J. Zenner.  The votes cast and withheld for such nominees were as
follows:

`Name                               For                    Withheld
----                               ---                    --------
John E. Bailye                     29,758,847             7,535,531
Bernard M. Goldsmith               33,255,920             4,038,458
Edward J. Kfoury                   33,137,264             4,157,114
Paul A. Margolis                   36,575,791             718,587
John H. Martinson                  36,580,791             713,587
Terence H. Osborne                 36,576,191             718,187
Patrick J. Zenner                  36,575,475             718,903`

2.  Increase in Plan Shares.  An amendment was proposed to the Company's 1997 Stock Incentive Plan to increase the number of
authorized plan shares by 1,750,000 shares.  There were 28,154,675 votes cast for the amendment, 9,122,087 votes cast against the
amendment and 17,616 abstentions.

Based on these voting results, each of the directors nominated was elected and the amendment to increase the authorized plan shares
was approved.

## ITEM 6.  Exhibits and Reports on Form 8-K

(i)  Exhibits

None

(ii)  Reports on Form 8-K

None

## SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date:  August 14, 2001

`By: /s/ John E. Bailye
                                  ______________________________________________
                                      John E. Bailye, President and
                                      Chief Executive Officer
                                      (Principal Executive Officer)


                               By: /s/ George T. Robson
                                   _____________________________________________
                                      George T. Robson, Executive Vice President
                                      and Chief Financial Officer
                                      (Principal Financial Officer)`